The announcement of a long term alliance between oil producers led by Saudi Arabia and Russian Federation to be ratified by the end of this year is being sold as a safeguard against any wild market price upswings as well as a way to protect the market rebalance supposedly being achieved by the Organization of the Petroleum Exporting Countries' (OPEC) production cuts.
Brent crude LCOc1 was up 89 cents at $65.73 a barrel at 1802 GMT, after rising to an 11-day high of $65.75 a barrel earlier in the session.
However, "short term crude demand aspects and other fundamental indicators [are] still rather bearish-looking", analysts at consultancy JBC Energy wrote in a daily note Monday.
"With oil prices recently rising above the U.S. shale breakeven price, estimated to be $63 per barrel in 2018, U.S. shale producers are likely to have already locked into forward prices around this oil price level and have already begun to ramp up production this year", QNB's note said.
Suhail al-Mazroui, energy minister for the United Arab Emirates, told media of the alliance formation, saying OPEC was urging its members to build oil capacity buffers to temper any wild upswings in price due to the weak US dollar this year.
April contract West Texas Intermediate (WTI) crude futures added 0.4 percent to $61.81 per barrel, driven by Friday's gains, as trading in the USA temporarily halted on Monday for President's Day.
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OPEC and non-OPEC producers reached an agreement in December 2016 to curtail oil output jointly and ease a global glut after more than two years of low prices. USA production, however, edged higher to 10.27 mbpd.
Non-OPEC stocks outside North America are also believed to decline this year and the next.
WTI has gained more than 8 per cent since the end of November, when the Organisation of Petroleum Exporting Countries and its allies agreed to extend an output-curb deal until the end of this year.
Oil output in the country is already at 10.27 bpd, a record that put the United States just behind Russian Federation and ahead of Saudi Arabia, two of the world's top oil producers. The number of U.S. oil rigs increased by seven last week, a fourth consecutive increase. Europe's main indexes were fairly stable on Tuesday but Asian markets closed broadly lower, with the Nikkei 225 closing down 1 percent, South Korea's Kospi falling 1.13 percent and the Shanghai Composite slumping 0.46 percent.
The American Petroleum Institute (API) is set to state its forecast regarding the USA crude supply on Wednesday.